A new audit put out by the Treasury Inspector General for Tax Administration (TIGTA) of the IRS has found that the agency has not been keeping accurate estimates of taxes that have gone uncollected.
The report specifically indicates that the agency’s Office of Research, Applied Analytics and Statistics (RAAS) has not developed a method to keep track of some of the tax gaps in uncollected debts.
“RAAS does not have documented policies or procedures for producing the Tax Gap estimates. While the IRS has high-level quality and research guidelines, they do not discuss the Tax Gap estimates,” the audit says.
The audit looked at varying types of taxes, including individual income taxes, corporate income taxes, employment taxes, and estate taxes.
The report comes after a growing concern by members of Congress “about the size of the Tax Gap, suggesting revenue raised from narrowing the Tax Gap could help pay for various policy proposals,” it says.
Some of the issues found in the audit include how the IRS does not have written policies or procedures that “specify the frequency of issuing Tax Gap estimates” or “help RAAS analysts meet internal milestones for developing the Tax Gap estimates.”
The TIGTA concludes its audit by including six different recommendations. These include suggestions such as coordinating with IRA business operating divisions to create and implement a formalized strategy to identify areas of noncompliance, instructing the chief data and analytics officer to develop consolidated written policies and procedures for developing the tax gap estimates, and reestablishing an advisory group to review any updates to the tax gap methodology that can help find the correct estimates.
The IRS concurred with five of the recommendations and partially concurred with one.
“IRS management did not agree to develop consolidated, written policies and procedures but did agree to load the procedural documents and the code for running the Tax Gap estimation into a single project folder,” the report says.
